Our website uses cookies

Cookies enable us to provide the best experience possible and help us understand how visitors use our website. By browsing Essential Retail Magazine, you agree to our use of cookies.

Okay, I understand Learn more

Comment: Why partnerships between retailers can work

The problems of over-capacity and falling footfall have featured in much of the media coverage of recent retail partnerships such as Asda and Decathlon or Sainsbury's and Argos. It is true that by sharing store locations both parties can benefit from space that comes at a lower cost, but these initiatives also represent proactive moves to address the evolving expectations of consumers and the changing role of the physical store.

Omnichannel consumers are also omni-retail consumers, less loyal and more comfortable than ever shopping across brands and price points. This is most clearly demonstrated by online marketplaces such as Amazon and eBay and those run by retailers such as Walmart, Tesco and Darty.  Marketplaces are successful because they combine highly-developed functionality, including site navigation and streamlined payment processes, with the option to browse, compare and buy products from multiple brands and retailers from one website.

Transferring these concepts to the physical space requires retailers to re-imagine the role of the store. If executed well, partnerships can turn stores into hubs for multiple consumer services and experiences and – in doing so – generate new forms of competitive advantage.

Beyond products: finding the right service partners

Success starts with identifying the right partner(s) to complement the existing offer. By partnering with Argos, Sainsbury's can provide its customers with access to an extended range that rivals that of Tesco Direct, without having to invest time and money in developing its own marketplace. Partnerships can also be sought to quickly "correct" struggling categories, as reflected by Debenhams decision to share space with Mothercare. A department store, such as Debenhams, can utilise a specialist like Mothercare to immediately enhance its product offer in less successful categories.

Mothercare benefits from ready-made, lower cost space and is better positioned to compete against other players, like Next and George.

As the role of the store evolves beyond products on shelves, partnerships will increasingly be sought based on the services and customer experiences they will bring with them. Google's first store, opened within Currys PC World, focuses on product discovery and education, and Currys has used this opportunity to promote its existing "interactive and informative" store services. The emphasis here is on the experiences that the physical store offers consumers. Like online marketplaces, the established store networks and customer traffic accessed through partnerships offer retailers valuable opportunities to experiment, adapt and expand faster and more flexibly than they could with their own standalone stores.  

Customer-centric operations

With the focus of the store shifting to customer experience both the "host" retailer and its partners need to clearly define their target service proposition and how this will be executed in-store. The different customer journeys and supporting service priorities need to be planned into the layout and operation of the store. Speed and convenience, high product interaction, technical support or personal shopping assistance each creates different layout and infrastructure requirements. Basic questions, such as where stock will be received, stored and made available to customers, how cash will be handled, or where queues and congestion may build up all need to be reviewed and resolved.

Intelligent adjacencies between retailer displays or services can demonstrate intentionality, a curated assortment and a joined-up approach to the customer experience. This may complicate the operation if retailers' services are split across multiple parts of the store, but poorly defined or ill-considered layouts risks generating confusion and frustration for customers as they are re-directed from one area to another.

Engaging electronically with customers, in advance of, or during, their store visit, is one way to help shoppers navigate the store. When prospective customers visit the Samsung shop on Best Buy's website, for example, they can see the uniforms worn by the Samsung Experience Consultants so they know who to look for when they arrive at a store. Mobile apps, or interactive displays, can then be used to connect with shoppers, regardless of which retailer they are currently shopping with, to communicate special offers to drive traffic between partners and support a seamless omnichannel experience.

Connected retailers

Sharing space hasn't typically meant sharing staff or systems. This must not become a barrier to a connected, consistent experience for the customer. Opening and closing times need to be reviewed in addition to agreement on staff presentation, availability and positioning around the store. Poor service reflects badly on all brands and must, therefore, be measured for quality and constancy.

Blurring the boundaries between retailers' operations – particularly around where products can be paid for, collected, and returned – will bring further improvements to the customer journey and the retailers' operating costs. Being able to balance labour across each other's operations requires trust and a greater level of integration but could result in some attractive savings, particularly during quieter periods of trade and for back-of-house tasks such as stock management and administration. Even transactional front-of-house activities could be shared without compromising on brand autonomy providing service expectations are compatible.

All retailers are under pressure to reduce their operating costs, whether to support profitable expansion or manage declining sales and product margins. Stores represent significant cost but remain extremely important in service delivery, especially as demands for same-day fulfilment increase. Combining assortments and assets with new partners challenges traditional approaches to growth and competition. By partnering well retailers will find new sources of profitability and flexible, adaptable sources of competitive advantage.

The Kurt Salmon team writes a regular column on technology in retail for Essential Retail.

Click below for more information:

Kurt Salmon